Correlation Between LCI Industries and Marine Products
Can any of the company-specific risk be diversified away by investing in both LCI Industries and Marine Products at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LCI Industries and Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LCI Industries and Marine Products, you can compare the effects of market volatilities on LCI Industries and Marine Products and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LCI Industries with a short position of Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of LCI Industries and Marine Products.
Diversification Opportunities for LCI Industries and Marine Products
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LCI and Marine is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LCI Industries and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products and LCI Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LCI Industries are associated (or correlated) with Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of LCI Industries i.e., LCI Industries and Marine Products go up and down completely randomly.
Pair Corralation between LCI Industries and Marine Products
Given the investment horizon of 90 days LCI Industries is expected to generate 0.89 times more return on investment than Marine Products. However, LCI Industries is 1.13 times less risky than Marine Products. It trades about 0.03 of its potential returns per unit of risk. Marine Products is currently generating about 0.02 per unit of risk. If you would invest 9,746 in LCI Industries on December 30, 2023 and sell it today you would earn a total of 2,560 from holding LCI Industries or generate 26.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
LCI Industries vs. Marine Products
Performance |
Timeline |
LCI Industries |
Marine Products |
LCI Industries and Marine Products Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LCI Industries and Marine Products
The main advantage of trading using opposite LCI Industries and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LCI Industries position performs unexpectedly, Marine Products can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Marine Products will offset losses from the drop in Marine Products' long position.LCI Industries vs. Malibu Boats | LCI Industries vs. MCBC Holdings | LCI Industries vs. Brunswick | LCI Industries vs. Twin Vee Powercats |
Marine Products vs. Brunswick | Marine Products vs. EZGO Technologies | Marine Products vs. Onewater Marine | Marine Products vs. Harley Davidson |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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